Jacob's Soapbox

The Android Trust: Why the EU Antitrust Case Matters

2014-08-01

It's recently been revealed that the EU is preparing an antitrust case against Google. A lot of people have already started to come out and claim that it's crazy for whatever reasons. But it's truly one of the most important coming pieces of litigation. Android is a massive monopoly, and it was created by an agreement between a wide variety of competitors to work together.

The first thing to bear in mind, is Google is smart. Ridiculously smart. These are the people who social engineer the placement of food in employee cafeterias to trick their employees into eating healthier. Google knows what it's doing, and it knew what it was doing when it created the Open Handset Alliance (OHA).

When Android came out, most of the OEMs have no idea what to do about the iPhone. They didn't even have smartphone models yet in most cases. I refer to Android as the "open source trojan horse", because it appeared to be a gift at the time.

Google offered up an open source platform with the means to compete with Apple. OEMs were basically given free reign to do whatever they wanted with it, as long as they agreed to some basic provisions: To not break application compatibility. And, you know, Google was willing to help them and such if they installed the Android Market on it. At it's best point, Android was like Linux: A completely open source project that you could do what you wanted with.

But the problem is, the app ecosystem, whether people realized it at the time or not, is the most powerful component of the platform. Windows Phone is, in many ways, better than Android. But it doesn't have the app ecosystem, and without that, nobody wants one. (BlackBerry and Palm also learned this the hard way.) And as the Android Market, now the Play Store, of course, gained traction, it became less and less possible to sell a device without it. (Note that back then, a lot of OEMs did produce devices without the market. That practice has almost entirely died off now.)

With each Android version, the OHA agreements have been tweaked. Gradually bringing each OEM in line with Google's vision. OEMs don't want it, but they have no choice: They either fall in line, or lose the Play Store, and hence, their product won't sell. OEMs have fundamentally no control over the devices they produce at this point. There's strict limits on customization, strict limits on timelines OEMs must provide updates, strict limits on preinstalled apps. These are not Samsung, HTC, or LG phones. These are all Google phones.

One of the worst provisions is the all or nothing requirement with Google Apps. If OEMs want the Play Store, which they need, they also must include all of Google's other apps, like Google Search and Google+. Preinstalling Google apps makes it harder for other companies to compete on the platform. As Google no longer has to innovate to maintain hold over the market, and newcomers are disadvantaged, innovation languishes.

Technically speaking, no, OEMs aren't prevented from developing an alternative OS. But market forces have ensured that isn't a problem: They can't run the Play Store. The no forking provision coupled with the mandate to preinstall Google apps prevents OEMs from developing competitors to Google's apps and services without abandoning Google entirely. (There's a huge potential profit cliff to forking Android. Google knows it.) The few things OEMs are allowed to do by Google, are the things Google knows can't threaten them. Anything that can threaten Google's monopoly is regulated.

It's a combination of market forces and the agreements that they've made to fill in the gaps, that ensure Google maintains control over every Android OEM. Google is smart enough to have engineered these rules in a way that looks good on the outside, but is just as locked in nonetheless. Most of the companies making Androids have no control over their own products anymore, and are too afraid of the reprisals to break out from it. Samsung is probably the only company that has the brand power to break from Google successfully, but Google's been tossing them a bone here and there to keep buying them off.

A dissolution of the OHA would allow OEMs to differentiate their devices again, providing their own custom experiences and competitive products. Yes, more fragmentation would occur, but that's a good thing. Fragmentation is just another word for "consumer choice". And without the OHA, competing services would be able to compete with Google's built in services, encouraging new innovation in a market that has started to become stale.